COVID-19 Financial Support & Obligations

COVID-19 Financial Support and Employment Law obligations

Employment law has not changed. 

The financial support schemes operate alongside existing employment law. Employment obligations have not been removed or changed by employers accessing COVID-19 financial support. 

Employers must ensure that they are meeting their pay obligations under both employment law and the requirements they agreed to when applying for these COVID-19 financial support schemes.

Employment Law obligations during COVID-19 alert level restrictions 

• Under employment law, employees must be paid for each and every hour that they work at their agreed wage rate. 
• Employers and employees can temporarily or permanently agree to vary the agreed rates of pay and hours of work. Any change requires good faith consultation and written agreement signed by both parties.
• Employers must pay employees as if they were in continuous employment.
• If employers can operate their business during alert level 4, they must offer employees work as usual. If they can’t offer employees work, employees must be paid their full pay.
• If employers can operate their business during alert level 4, and employees choose not to work (for whatever reason), employees are not entitled to payment: but employees may ask to be paid sick leave and/or annual leave and/or any subsidy available. 
• If employers cannot operate their business due to COVID-19 alert level restrictions, employees must receive their full pay.
• If employers cannot pay 100% of the employees’ wages, and employees cannot provide agreement, employers must follow a restructure-type process: involving consultation and feedback.

COVID-19 Wage Subsidy Scheme and Obligations

• Any wage subsidy does not override employment law, including (but not limited to) the Employment Relations Act 2000, Minimum Wage Act 1983, Holidays Act 2003 and Health and Safety at Work Act 2015.
• Employers must discuss their application with their named employees and gain their consent to information sharing.
• Employers ought not unlawfully compel or require any of the named employees to use their leave entitlements for the period they receive the subsidy in respect of those employees.
• From the date of the wage subsidy application, the employer must retain the named employees for the period they receive the subsidy; and use the subsidy to support paying the ordinary wages and salary of the named employees, in accordance with their employment agreements and statutory obligations, for the period you receive the subsidy. 
• Employers remain responsible for paying the ordinary wages and salary of the named employees.
• For the period employers receive the subsidy, they will:
  • use their best endeavours to pay at least 80 per cent of each named employee’s ordinary wages or salary; and
  • pay at least the full amount of the subsidy to each named employee; but
  • where the ordinary wages or salary of a named employee as at 16 August 2021 is lawfully below the amount of the subsidy, pay the employee that amount.
• Ordinary wages or salary means:
  • in relation to a named employee, the ordinary wages or salary as specified in the employee’s employment agreement or in accordance with relevant statutory obligations as at the date you apply for this subsidy; or
  • in relation to those who are a sole trader or self-employed person, the weekly amount that they regularly pay themselves as at the date they apply for this subsidy.